Enact Holdings, Inc. (ACT) - Q1 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. Enact Holdings, Inc. is a subsidiary of Genworth Financial, Inc., engaged in writing and assuming residential mortgage guaranty insurance. The company operates in a single segment, primarily insuring prime-based, individually underwritten residential mortgage loans to enable borrowers to purchase homes with down payments of less than 20%.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenues | $312.1 million | $306.8 million |
| Net Income | $167.8 million | $165.8 million |
| Diluted EPS | $1.18 | $1.08 |
| Net Investment Income | $70.9 million | $63.0 million |
| Losses Incurred | $37.2 million | $30.5 million |
| Operating Cash Flow | $224.0 million | $226.7 million |
| Cash and Equivalents | $549.0 million | $635.3 million |
| Long-term Borrowings | $744.9 million | $744.5 million |
| Loss Ratio | 15% | 12% |
| Expense Ratio | 20% | 21% |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 2% year-over-year, driven by a 12% increase in net investment income due to higher yields and average invested assets. Premiums decreased slightly (1%) due to higher ceded premiums and lapse-driven rate declines.
- Profitability: Net income rose 1% to $167.8 million. Adjusted operating income (non-GAAP) increased to $172.4 million from $168.8 million.
- Loss Experience: The loss ratio increased to 15% from 12%. While current period delinquencies increased (13,559 vs. 12,237), the company recorded a favorable reserve release of $39 million in Q1 2026 compared to $47 million in Q1 2025.
- Investment Portfolio: The portfolio grew to $6.13 billion in fair value. Net investment losses of $5.8 million were recorded, primarily due to realized losses on the sale of fixed maturity securities.
- Capital Returns: The company repurchased 2.29 million shares for $93.2 million and paid dividends of $29.8 million. A new $500 million share repurchase authorization was announced in February 2026.
Guidance, Outlook, and Risks
- Outlook: Management expects new insurance written with strong credit profiles to positively contribute to future profitability. The company maintains a risk-to-capital ratio of 10.0:1, well below the 25:1 regulatory maximum.
- Dividend Increase: The quarterly dividend was increased to $0.24 per share, payable in June 2026.
- Market Conditions: The macroeconomic environment remains volatile with inflationary pressures and fluctuating mortgage rates. Refinance volume drove a 30% increase in New Insurance Written (NIW) to $12.8 billion.
- Risks: Key risks include the inability to maintain Private Mortgage Insurer Eligibility Requirements (PMIERs), deterioration in economic conditions, uncertainty in loss reserve estimates, and competition from government-sponsored enterprises (GSEs).
Investor Verification Checklist
- Verify the sustainability of the 15% loss ratio given the increase in new delinquencies and potential severity impacts from extended forbearance.
- Confirm the impact of the new $500 million share repurchase program on future capital allocation and liquidity.
- Monitor the company's compliance with updated PMIERs asset standards phasing in through September 2026.
- Assess the stability of the investment portfolio's unrealized losses ($149.6 million gross) in the context of rising interest rates.
- Review the effectiveness of loss mitigation activities in driving the $39 million reserve release.